What question did this study set out to answer?

This research investigates how HR transformation affects the sustainability of village-owned enterprises through digital adoption and its impact on local economic development.

June 10, 2026

Village-owned enterprises as engines of inclusive and sustainable local economy: rethinking leadership, HR and digitalization

Key Points

This research investigates how HR transformation affects the sustainability of village-owned enterprises through digital adoption and its impact on local economic development.
Mixed-method approach
Study 1: Path analysis with survey data from 238 village-owned enterprises
Study 2: Thematic analysis of qualitative interviews with ten water-based tourism enterprises
HR competence significantly influences long-term sustainability via digital adoption
Digital leadership enhances the relationship between HR competence and sustainability
Qualitative findings indicate digitalized VOEs create new job roles and engage youth in rural economies

Abstract

Purpose This study aims to examine how human resource (HR) transformation influences the sustainability of village-owned enterprises (VOEs) through digital adoption and how these dynamics contribute to inclusive local economic development, particularly youth employment. It also investigates the moderating role of digital leadership in amplifying these effects. Design/methodology/approach A mixed-method approach was used. Study 1 used path analysis with the HAYES PROCESS Model 58 and survey data from 238 VOEs to test the mediating effect of digital adoption and the moderating role of digital leadership. Study 2 applied thematic analysis using NVivo 12 on qualitative interview data from ten water-based tourism VOEs in Central Java, Indonesia, to explore broader macroeconomic linkages. Findings HR competence, encompassing digital skills and inclusive values, significantly influences long-term sustainability through digital adoption. Digital leadership strengthens this pathway and enables translating sustainability into youth-oriented labor absorption. The qualitative analysis further reveals that digitalized and well-led VOEs generate new employment roles and activate youth engagement in the rural economy. Research limitations/implications This study is limited to a cross-sectional design of VOEs, reducing generalizability and dynamic insights. Nevertheless, it integrates strategic management, information systems and development perspectives, offering a policy-relevant framework for rural digitalization and inclusive growth. Originality/value This study contributes to Indonesia’s rural economic development by providing a strategic roadmap that links HR development, digital transformation and inclusive economic outcomes. It also offers a theoretical integration of the dynamic capabilities view, technology acceptance model and technology–organization–environment framework within the VOEs context.

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